Hearth & HomeSeptember 2019

Back to School

By Richard Wright

Walk by the Telescope showroom during any market, whether it’s the Preview Show in July or the Casual Market Chicago in September, and you’ll notice a crowd has gathered – a crowd larger than any other manufacturer’s. As customers and reps can attest, Telescope is doing a lot of things very right, from product design, to materials, to pricing.

Hearth & Home: How long have you been CEO of Telescope Casual Furniture?

Kathy Juckett: “Maybe 15 or 16 years.”

How well did Telescope do in the U.S. this year? How were your sales?

Juckett: “Excellent. Our sales are up double-digits in both retail and contract.”

How about Canada? Did anything change up there?

Juckett: “Yes, we have definitely grown a bit in Canada. We have some new re-presentation there that is doing a pretty darn good job, especially in western Canada.”

What percent of your business comes from online sales?

Juckett: “It’s fairly small. I would say maybe 10 or 12%.”

What percent of your business is through the specialty channel?

Juckett: “Probably 60.”

Is hospitality still growing as fast as it was, and if so, why?

Juckett: “Yes. To some degree, I think hospitality is affected less by economic changes than some of the other parts of the industry. We make a very good product and our customer service is outstanding; we get constant feedback from the hospitality people that we do business with. They just love having a company where they can pick up the phone, talk about the problem, and get it fixed.

“You’ve got to be that way because it’s a black eye on them if they can’t get it fixed. Nobody wants to do that stuff, but you’ve got to do that stuff. The most important function you can have after making that sale is supporting the customer. Apparently there are a lot of companies out there that don’t, we’re told.”

What is your view of the specialty network in terms of financial health? Are there many retailers who are struggling a bit?

Juckett: “I don’t think so. A few years ago I would have said, yes. In the big shakeup, a few guys may have crashed but the strong survived and have been able to maintain through flat economic times and flat retail sales. Certainly they have become pretty savvy about getting people into their stores and have found ways to make it work. Our core dealers have done okay and are doing very well right now, and that is really encouraging to see.

“They have figured out ways to deal with the Internet and they have figured out how to make that work with their own programs. Many of them are dabbling in hospitality themselves, through their stores, and hiring people to go out to all of their local golf courses and hotels and motels, etc.

“Our reps will not quote if a store is quoting. They won’t participate in that, and with any of our contract reps the stores come first. So our customers in any store come first, and that is just a policy that we developed right off the bat because we are only as good as their strength, so we want to keep them strong and supported all the way.”

That makes total sense, but we both know that many manufacturers do the opposite – they compete against their own dealers. That has always appeared to be short-sighted to me.

Juckett: “It is, and you can’t have the attitude of getting the sale at all costs because I’m not willing to pay the costs of upsetting the people that have been our bread and butter for centuries. You’ve got to be respectful to the guy out there who is on the front line.”

What about any trends that you may have noticed that are relatively new?

Juckett: “Pretty much anything Marine Grade Polymer or plastic, and the Millennials definitely tend toward a more modern, simplistic design, less is more kind of thing. Millennials are tough because they want what they want right then and there. They are used to an instant society, one that grew up with Amazon Prime. We have a little different view of that because we knew how it used to be so it’s just a whole different ballgame for us.

“You can definitely see their influence in some of the designs that we’re doing because they know what they would buy and that is important. They like a unique look, but they also like things to be clean and a little toward modern, not completely modern in a lot of cases but just a little more clean and fresh – and they want it quickly. Instantly.

“They are used to the whole IKEA concept of assembling and not being afraid to put it together. We don’t do much of that because our retailers tend to not appreciate having to put things together, and we don’t really want them to have to put things together. Millennials are having quite a bit of influence in design and are actually designing some of their lines for us, which appeals not only to the Millennials but obviously other people with that type of design taste. That is how we’re dealing with the Millennials. We get the Millennials to design for the Millennials.”

A snapshot of the showroom, Patio Essentials.

How many dealers do you have now, Kathy?

Juckett: “It’s a huge number of retailers, but there are about 800 core dealers that do the bulk of the business. We have actually been growing that number of dealers. We have been purposely going after that. We have been really working at broadening that base.”

You don’t mean there are a lot of new retailers starting up in the industry now, do you?

Juckett: “No. We’re just getting floor space in other places that we haven’t had in the past. Whether we’re replacing somebody or not is hard to say, but we are getting there. We are getting in there because we are making products that people really want on their floor. We have definitely increased our dealer base very nicely in the last three years.”

Are sales of your Marine Grade Polymer furniture still growing at a very nice pace?

Juckett: “Yes.”

Are you surprised that there hasn’t been a rush from more manufacturers into that field?

Juckett: “There has been. There’s lots of competition now. But not too many people are using the same high quality material that we’re using. They are using the cheaper stuff that has foam cores. There are not a lot of people out there producing with Marine Grade, top shelf stuff.”

We understand that, for the last few years, you have been implementing The Toyota Way, a managerial and production system, and that the results have been impressive.

Juckett: “I’ve been here 40 years and I’ve watched all these fads, this type of manufacturing style and that type of manufacturing style. There are all these theories that go around. When our group first started looking at it, what we found was that we learned about it in the first six months. We just sat down and immersed ourselves in the whole process for six months, just getting started. It was what we did all day every day right here in the factory. We had somebody come in and work with us. But the basic premise of it is so, so simple.

“When Kiichiro Toyoda made his first car in Japan, he didn’t have any money. He just decided he was going to make cars. So he learned to make do with anything and everything that he could find, and he learned to continually improve every process, making it better and better. As his business grew and he started to make a little bit of money here, a little bit of money there, then he could modify things, not for the sake of modifying them, but only if it made sense to modify, only if it was going to add value to the product in the eyes of the customer. That is how you always have to think.

“When you are going to do something in the factory, you’re going to change a process. If that isn’t something that a customer is willing to pay for in the end, then you don’t do it. You might think it’s a great idea, and it might be a great idea, but in the end you have to determine whether or not that is something the customer is going to be willing to pay for in the price of the product. So there has always been continuous improvement – nonstop. We just never stop. It just keeps going and going and going and that becomes your culture after a while.

“But you must have buy-in from everybody at all levels of your organization, and they have to understand from the beginning that this isn’t some fad. This is how we do business now. This is what we are all about now. You analyze everything, everything that you do and every reason that you do it. How many times you move a product. How many times you handle a product. How many times you have any interactions with that product. If anything that you’re doing to that product does not advance that product to the next phase, then you shouldn’t be doing it. You better figure out how to eliminate that step because that would be considered non-value-added. Go on to the next step.

“If you have non-value-added labor, non-value-added processing, those are the things you really want to get out of the process, but then you also have non-value-added but necessary because there are some things that don’t necessarily advance the product or take it to the next step, but it is something that you have to do. Take, for example, inspections. They are necessary, but they don’t necessarily advance it to the next step.

“We, as a company, are going to make sure that everything went exactly right, even though this whole system is based on good quality and the parts coming off in good quality to start with. But we still have that stop-gap measure at the end just to double check – it is so necessary. Inspections are considered non-value-added, but necessary. The whole thing is based on a very simple premise.

“Don’t spend money where you don’t have to. Don’t throw money at things – just stop. This was the thing that was really hard for us because we were raised by my father, and when my father heard about a problem he would be off to solve it. That was the way we all did it; that was the mode that we were all brought up with in this business. I’m not talking about just the family people, but the people that he brought to the organization with him. We are all problem solvers; that is what we do.

“Here’s the thing we learned: When we are faced with a problem, instead of jumping up and figuring out what is going on and solving the problem, we first have to stop and dig right down to the bottom. We have to take those few minutes in the beginning, even if it’s a day or three days or a week. If it’s a really gnarly problem, we come into the conference room and put it all up on the board; we follow very specific problem-solving methodology that is taught by Toyota to get to the root of the cause.

“You may think you know what the problem is, but if you don’t look deep enough, and you don’t tear it all apart, there is almost always something else that is dragging it. If you don’t get to the root cause of the problem, and then, as a group, attack the root cause and eliminate it, you are only putting a Band-Aid on until it happens again – and it is going to happen again if you don’t get to the root cause. You may know the problem, but you haven’t gotten to the root cause because you keep solving the same problem over and over again, and it makes you angry.

“Here’s an example that happened a couple of years ago. We were having a lot of problems accurately predicting our (delivery) dates for our dealers and they were complaining that our dates were not accurate. Before we started listening, we were all working on various aspects of what the problem was with the dates. We decided that we were going to use that as one of our projects when we were being trained by Toyota. It took us about two weeks because we had all been involved in this for two years prior to this process, and we all had tried everything we knew.

“At the end of the day, do you know what the root cause of our dates not being accurate was? The production manager didn’t have good enough visibility of the final area, which is the last step in the process before putting it in the box and sending it to the customer. He didn’t have good enough visibility, and he didn’t have any capacity planning tools there so that he could very accurately, not predict, but know when he’s going to get off every one of those benches, every day. When he is quoting dates now, he is quoting very accurate dates because he has all these tools that we made for him to be able to look and know the date that product is going to come off that final bench and go in a box.

“So, being in a business that has been around for 116 years, there is a lot of stuff that we did just because that is how we always did it, and it evolved over time and it worked and it kept working. But the scope of the changes that we have made to the visible layout of the plant completely changed everything. Now, everything goes one thing to the next thing to the next thing.

“We first started with the metal department because it is the biggest, gnarliest department with the most parts and most variety in it. The first thing the Toyota people did was to have us lay out a big part of the whole metal department. Then we had to trace where each part went in the course of its production, and it was a giant mess. It looked like a pile of spaghetti. We call it the spaghetti diagram. It was just a mess. Things were just going all over the place here, there and everywhere.

“When we tore the department down and put it back together again, it was all set up so that when it comes off the saw it goes right to the lift or the next operation, and from that operation to the next operation, and from that operation across the aisle waiting for the welders, and it comes from the welders directly to the product block. Now we are using straight lines. There is no spaghetti anymore. Somebody took (that schematic) down and threw it away because we had it posted up in the metal department: It made me so sad.

“I wish we had the before and after diagram because the picture tells more than a thousand words. It is like several million. And every time you eliminate all the running around that the product is doing, you minimize the opportunity to get hurt, damaged, dinged, or whatever, and you minimize all the non-value-added labor because customers don’t want to pay us for driving this product around in the shop. They want to pay us to cut it, bend it, punch it, drill it, weld it, powder-coat it, and send it to them. They don’t want all the other crap in between.

Inspecting raw material on the Powdercoat Line.

Preparing the Powdercoat chain for raw materials to begin the next rotation.

“So the Toyota Way is just, very simply, continually, continually, continually looking at your organization, removing waste, and continually improving, making sure that everything is value-added, and something that the customer is going to want. Now, when I go out on the shop floor, I have supervisors who will say, ‘Hey, check this out. Our customers don’t want to pay for that.’ That is the mentality that is on the shop floor, and even all the way through the organization. They get it. They understand it. You see, they are customers too, they go out and buy stuff, and they wouldn’t want to be paying for something wasteful. In its complexity, it is very simple, really very, very simple.

“The other part of it that we really like is the respect part, because the Japanese are huge about honor and respect. We view our role as kind of subservient to the people out there (production workers), and people in our organization, in that it is our job to eliminate the things that hold them up and slow them down and make it impossible for them to make their rates or to make whatever they are expected to make for production that day. It’s the job of everyone who isn’t necessarily out there on the floor.

“We reduced a lot of our inventory, but then we raised some inventory in areas on purpose so that we could have products available at a moment’s notice to go into any color powder-coat that we happen to be running on that given day. It was all done very scientifically with the guys that knew how to do that type of planning, to know what level of each frame style we need to keep in the Kanban.

“Kanban is a supermarket. So now the whole factory, the lower level departments, drive toward keeping the Kanban at a level that allows us to, at a moment’s notice, produce any product that we need in whatever powder-coat color wanted. That gives us an enormous amount of flexibility because we determined that our variety was the smallest just before powder-coat.

“So you build your frames all the way, as far as you possibly can, so that you have the minimal amount of variety sitting in front of powder-coat because you might have 168 or 180 or 190 or 200, whatever the number is, different frame styles. But that is where you plan from because that is the smallest place. That is the time your variety is the smallest. Once you put 11 finishes and 180 fabrics on your chairs, you’re talking about millions of different potential combinations. So we manage everything from the inventory prior to powder-coat, which makes us incredibly flexible.

“Now it’s a little tricky because a contract order can come in and wipe out a year’s supply of something that we might be planning on. So we studied very carefully all of the products that normally get purchased in contract, and we built standard deviations into the inventory level of those products in the warehouse at the Kanban. That is the last thing we want to do, wipe out our whole supply of different products because of one order.

Kathy Juckett with employee Michael Blockburger, Tables Department.

“When people are having arguments out there, or people get snarky with each other, I say, ‘Hey, you’re not allowed to treat each other any differently than I treat you.’ I treat everybody with respect and kindness and they know that getting on the wrong side of me is not a fun thing. It has to be that way. You treat them with respect, and you treat them like they’re important, because they are; you find something to like about every single person that you have in your organization, and that is hugely important.

“The Toyota Way is not just about eliminating the waste and the non-value-added labor, or transportation and handling. Here is a good example that the Toyota folks were telling us about. They had been running this production line of a certain car for a bunch of years, and when their production is slow they don’t lay anybody off because they’ve got billions of dollars, which would be nice if we could ever get to that point. We rarely lay people off, but once in a while we have to. Anyway, when their production is slow they rotate their crews, and they have one crew do the work and the other crew go do continuous improvement exercises on the process that has already been continuously improved a whole bunch of times because there is no end to the continuous improvement.

“So this one group of guys were the wiring guys and they wired the whole car at the end, which was one of the very last things that get done. So they were saying, ‘You know, this is just a really complicated process. We really wish that we could take some time out of this because it’s the slowest process on the line, and everything else has to be geared to that process.’ One of the guys working on the job at the time said, ‘You know, the damn door is in my way. Do you know how much faster I could work this thing through and get this all done if the door wasn’t in my way?’ So they all just stood there looking at each other thinking, ‘Wow. We’re not going to put the doors on until we’re done with the wiring part of it.’

“So they increased the speed on their production line and the efficiency with which they did the work by a huge amount just by putting the door on after they went to do that particular process. The answers are 99% of the time on the shop floor with the people who do it all day for a living. That is the other part of what we do when we’re brainstorming about something, a particular issue, or an area that we’re having issues with. We bring the people right in off the shop floor and we sit here, buy lunch, and brainstorm through lunch with them and come up with really, really good (A) solutions, but (B) directions for the root cause because the answers are always on the shop floor.

“They are always there and that is nothing that I didn’t already know. Toyota didn’t teach me that. I learned that early on in my career by being out in the factory and being on the shop floor all the time. The guys who do the job all the time know the answers to the questions. We just have to know the questions to ask. That is our job as management, and the easiest way to figure that out is not to worry about the questions, just go out and talk to the guys on the floor about what you’re wrestling with and you’ll find out what the question is right off the bat.

Justin Taylor, Metal Department.

“Our profitability has been tremen-dously impacted since we have been working so diligently at removing all of the waste and non-value-added operations, and movement, and all of that from our process, and analyzing our business from the standpoint of where it makes the most sense to plan. There are no secrets to it. It’s not a secret, but it takes a huge commitment. You can’t just give it lip service. If you don’t own it, and you don’t live it, and you don’t have the buy-in from the owners all the way through the whole organization, it isn’t going to happen, and it isn’t going to be effective.”

Was it tough to get your key people on board?

Juckett: “No, not at all, they could see the logic in it because it is so basic.”

Listening to you, a couple of lines came into my head a few times – “Hiding in plain sight,” and that old Bob Dylan favorite, “The answer is blowin’ in the wind.” It’s simple, but being able to see it is not simple.

Juckett: “Yes.”

The Toyota Way

The Toyota Way is a comprehensive expression of the company’s management philosophy, which is based on the two foundational principles of Continuous Improvement (kaizen) and Respect for People.

Toyota documented the company’s management philosophy in 2001 but has not made the document publicly available. Dr. Jeffrey Liker, a professor of industrial engineering at the University of Michigan, analyzed the philosophy and principles in his 2004 book, “The Toyota Way.” Liker characterizes the Toyota Way as “a system designed to provide the tools for people to continually improve their work.”

According to Liker, Toyota’s management philosophy can be broken into 14 guidelines categorized under four main principles:

Long-term philosophyThe focus should be on extended sustainability rather than short-term gain and fostering a sense of purpose in employees for productivity.

The right process will produce the right resultsContinuous improvement is promoted by eliminating the seven wastes identified by Dr. Taiichi Ohno, the father of the Toyota Production System (TPS). The seven wastes (muda) are: overproduction, waiting, unnecessary transport or conveyance, overprocessing or incorrect processing, excess inventory, unnecessary motion and defects. Employee empowerment in this area comes from the fact that any employee can call a halt to production when a problem is detected.

Add value to your organization by developing your people Leaders must adopt and promote the philosophy to employees; employees and teams must embrace the philosophy and teamwork should be recognized; the development of business partners and suppliers should be fostered similarly to the development of employees.

Continuously solve root problems to drive organizational learningManagers must monitor operations personally to understand problems; solutions should be determined through consensus and implemented swiftly; the organization must consistently monitor and evaluate its own practices, with the purpose of constant improvement.

Elements of the Toyota Way have been widely adopted in business areas including lean production, lean management, Agile software development and project management.

By Tom Lassiter

By Richard Wright

Karen and Paul Galindo have made a success of their marriage, and of three stores they ran under the names Greenhouse Mall, and Outside in Style, based in Texas. Now they’re closing those stores, and opening a women’s fashion shop in Santa Fe, New Mexico.

In early August, Hearth & Home faxed a survey to 2,500 specialty retailers of hearth, patio, and barbecue products, asking them to compare July 2019 sales to July 2018. The accompanying charts and selected comments are from the 206 usable returns.

Monday, September 9, 2019

Reader Comments

Wes Stewart,

Managing Partner of Sunset West USA

Vista, CA

Reasons for Reading Hearth & Home: “I enjoy the coverage of all the interrelated topics and categories within and around casual furniture. I feel that Hearth & Home offers a complete perspective on the industry. To date, my favorite article was the profile of Richard and Catherine Frinier in February’s issue.”